Murillo v. Kohl's Corporation et al

Filing
79

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MIGUEL MURILLO,
MICHAEL BAEHMAN, and
BONNIE BAEHMAN
Case No. 16-CV-196-JPS
Plaintiffs,
v.
KOHL’S CORPORATION and
KOHL’S DEPARTMENT STORES, INC.,
ORDER
Defendants.
On September 1, 2016, pursuant to Federal Rule of Civil Procedure
26(c) and Civil Local Rule 7, the defendants filed a motion for a protective
order that would preclude the deposition of Michelle Gass. (Docket #49). Ms.
Gass is Kohl’s Chief Merchandising and Customer Officer, with only Kohl’s
Chief Executive Officer, Kevin Mansell, holding a higher position within the
company. (Docket #50 at 2). In response, the plaintiffs argue that the
defendants have failed to satisfy their burden to establish “good cause” in
support of such a protective order. (See generally Docket #72). The defendants’
motion is now fully briefed and ripe for adjudication. (Docket #50, #72, #76).
For the reasons stated herein, the Court concludes that a protective order is
warranted and will, therefore, grant the motion.
1.
BACKGROUND
On February 18, 2016, the plaintiffs filed a complaint challenging the
defendants’ purportedly false and misleading marketing practices. (See
Docket #1; see also Docket #14 (first amended complaint)). Specifically, the
plaintiffs allege that the defendants have engaged in a pervasive, nationwide
scheme by which they misrepresent the existence, nature, and amount of
price discounts applied to “original” or “regular” item prices. (Docket #14
¶¶ 1-9, 25-29). By fabricating or inflating their “original” prices, the plaintiffs
claim the defendants’ “sales” or “discounts” create the false impression that
consumers are getting a better deal than what they actually are. (Docket #14
¶¶ 1-9, 25-29). The plaintiffs also claim that the defendants falsely convey to
consumers the impression that their “original” prices are significantly lower
than those regularly charged for those products by other retailers. (Docket
#14 ¶ 27). As a result of these purportedly deceptive practices, the plaintiffs
claim to have purchased merchandise, or paid more for merchandise, than
they would have absent deceptive price comparisons. (Docket #14 ¶ 26).
According to the parties’ briefs, the plaintiffs have deposed six
witnesses during the discovery phase of this litigation. (Docket #50 at 1).
These deponents include two 30(b)(6) witnesses, two senior buyers, a senior
vice president, and a pricing compliance analyst, each of whom have testified
how regular and sale prices are set at the defendants’ stores. (Docket #50 at
1). In addition, the plaintiffs recently noticed the video-taped deposition of
Kohl’s Chief Merchandising and Customer Officer, Mr. Gass. (Docket #50 at
1).
On the one hand, the defendants argue that, pursuant to Federal Rule
of Civil Procedure Rule 26, courts have repeatedly recognized that senior
corporate executives—often called “apex” witnesses—are particularly
vulnerable to harassing and disruptive discovery requests designed to place
undue pressure on corporate defendants. (See generally Docket #50, #76). For
this reason, the defendants encourage the Court to restrict the plaintiffs’
ability to depose Ms. Gass because the plaintiffs have failed to establish that:
(1) Ms. Gass has “unique or specialized knowledge” necessary to the
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resolution of the case; and (2) the plaintiffs have exhausted alternative, less
burdensome avenues for obtaining the information that is now being sought
from her. (Docket #50 at 2-3). With regard to the latter point, the defendants
argue that all of the witnesses that have been deposed in this case have
consistently testified that the pricing decisions at the heart of this action are
made by individual buyers based on competitive market factors and are not
directed by upper level executives like Ms. Gass. (Docket #50 at 4). Thus,
because: (1) the defendants have not mentioned or identified Ms. Gass in any
pleadings, filings, or discovery responses; (2) her name does not appear in
any document produced in this case; and (3) the defendants do not intend to
call her as a witness at trial or offer her declaration in support of any key
motions in this matter, the defendants argue that a protective order should
issue. (Docket #50 at 5).
The plaintiffs, on the other hand, argue that Ms. Gass, by virtue of her
role within the company, is knowledgeable regarding a number of issues
relevant to this lawsuit. (Docket #76 at 2, 5-6, 8). Though the plaintiffs have
not articulated these issues in a consistent manner, at bottom, it appears that
they are arguing that Ms. Gass is generally knowledgeable about the
defendants’:
•
labeling, advertising, and marketing practices; and
•
policies with respect to pricing—namely, financial plans,
margins, markups.
(Docket #72 at 2, 5-6). Moreover, the plaintiffs claim that none of the other
deponents in this case, nor any of the discovery that they obtained, have shed
sufficient light on these topics. (Docket #72 at 6).
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The Court concludes that Ms. Gass’s deposition would be unduly
burdensome and disproportionate to the needs of this case given: (1) Ms.
Gass’s lack of personal knowledge with regard to the pricing decisions made
by buyers; (2) the lack of evidence tending to suggest that Ms. Gass is
responsible for, or involved in, directing a set of uniform policies that affect
the defendants’ pricing decisions; (3) the number of opportunities that the
plaintiffs have had to depose the defendants’ employees, all of whom have
possessed relevant and responsive knowledge regarding the topics in
question; and (4) other discovery that has already occurred in this case.
Accordingly, the Court will grant the defendants’ motion for a protective
order. (Docket #49).
2.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 26(b)(1), “[p]arties may obtain
discovery regarding any matter, not privileged, that is relevant to the claim
or defense of any party….” Fed. R. Civ. P. 26(b)(1). “Although there is a
strong public policy in favor of disclosure of relevant materials, Rule 26(b)(2)
of the Federal Rules of Civil Procedure empowers district courts to limit the
scope of discovery if ‘the discovery sought is unreasonably cumulative or
duplicative, or is obtainable from some other source that is more convenient,
less burdensome, or less expensive.’” Patterson v. Avery Dennison Corp., 281
F.3d 676, 681 (7th Cir. 2002) (quoting Fed. R. Civ. P. 26(b)(2)). Though district
courts have “broad discretion” over discovery matters, they “should consider
‘the totality of the circumstances, weighing the value of the material sought
against the burden of providing it,’ and taking into account society’s interest
in furthering ‘the truthseeking function’ in the particular case before the
court.” Id. (internal citations omitted).
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The federal rules authorize the entry of an order protecting a party
against discovery only when good cause is shown. Fed. R. Civ. P. 26(c).
Under Rule 26(c), “good cause” exists when justice requires the protection of
a “party or a person from annoyance, embarrassment, oppression, or undue
burden or expense.” Fed. R. Civ. P. 26(c)(1). The party seeking a protective
order bears the burden of making this “good cause” showing. See Milwaukee
Elec. Tool Corp. v. Chevron N.A., Inc., No. 14-CV-1289-JPS, 2015 WL 4393896,
at *5 (E.D. Wis. July 16, 2015). In this respect, however, conclusory statements
of hardship are not sufficient. See Zenith Electronics Corp. v. Exzec, Inc., 1998
WL 9181 at *8 (N.D. Ill.1998).
Flowing from the discovery rules, and “[u]nder what has become
known as the ‘apex doctrine,’ the Court may protect a high level corporate
executive from the burdens of a deposition when any of the following
circumstances exist: (1) the executive has no unique personal knowledge of
the matter in dispute; (2) the information sought from the executive can be
obtained from another witness; (3) the information sought from the executive
can be obtained through an alternative discovery method; or (4) sitting
for the deposition is a severe hardship for the executive in light of his
obligations to his company.” Naylor Farms, Inc. v. Anadarko OGC Co., Case
No. 11–CV–01528–REB–KLM, 2011 WL 2535067, at *1 (D. Colo. Jun. 27, 2011).
In this way, the “apex doctrine seeks to prevent a high-ranking corporate
executive[s] from being run through the wringer of civil discovery, when
they do not have personal knowledge of the relevant facts; in other words,
to protect apex employees ‘from annoyance, embarrassment, oppression, or
undue burden or expense….’” Dyson, Inc. v. Sharkninja Operating LLC, Case
No. 14-CV-0779, 2016 WL 1613489, at *1 (N.D. Ill. Apr. 22, 2016) (citing Fed.
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R. Civ. P. 26(c)(1)); see also Celerity, Inc. v. Ultra Clean Housing, Inc., Case No.
C05–04374 MMC (JL), 2007 WL 205067, at *3 (N.D. Cal. Jan. 25, 2007)
(“Virtually every court that has addressed deposition notices directed at an
official at the highest level or ‘apex’ of corporate management has observed
that such discovery creates a tremendous potential for abuse or
harassment.”) (collecting cases). Though the doctrine “is not an ironclad rule,
[it] bespeaks sensitivity to the risk that very valuable executive time would
be wasted where the officer has no real information.” 8A Charles Alan
Wright, Arther R. Miller, and Richard L. Marcus, Federal Practice and
Procedure, § 2036 n.7 (3d ed.).
3.
ANALYSIS
In support of their claim that Ms. Gass’s deposition is proper and
appropriate, the plaintiffs claim that Ms. Gass—by virtue of her role within
the defendants’ corporate structure—possesses relevant knowledge
regarding the defendants’ overall labeling, advertising, and marketing
policies. (Docket #72 at 2, 5-6, 13-16). As a basis for this assertion, the
plaintiffs quote a description of Ms. Gass’s “leadership” position from
the defendants’ website. (Docket #72 at 13). Second, the plaintiffs claim
—without any citation to the record—that Ms. Gass is knowledgeable about
specific pricing policies implemented by the defendants, namely those
related to margins, financial plans, and markups. (Docket #72 at 7, 11).
Nonetheless, the Court concludes that the defendants have satisfied
their burden to demonstrate “good cause” for the protective order because
Ms. Gass does not appear to possess any particularized knowledge beyond
that which other witnesses have testified regarding the labeling, advertising,
and marketing policies at issue in this case. Ultimately, the plaintiffs claims
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turn on the defendants’ propensity to engage in false price comparisons. (See
generally Docket #14). And, despite Ms. Gass’s overall role in overseeing
“merchandising,” “planning and allocation,” “product development,” and
“customer engagement strategy,” the plaintiffs present no basis from which
the Court can conclude that Ms. Gass has any “specialized” or “unique”
knowledge about the manner in which the defendants price their
merchandise. See Burns v. Bank of Am., Case No. 03-Civ.-1685-RMB-JCF, 2007
WL 1589437, *3 (S.D.N.Y. June 4, 2007) (“Unless it can be demonstrated that
a corporate official has some unique knowledge of the issues in the case, it
may be appropriate to preclude a[ ] deposition of a highly-placed executive
while allowing other witnesses with the same knowledge to be questioned.”)
(internal quotations omitted).
Here, Ms. Gass has sworn under oath that “in my position…I am not
responsible for setting retail or promotional prices for the merchandise that
is sold at Kohl’s department stores.” (Docket #52 ¶ 3). Nor “did [she] set the
retail or promotional prices for the merchandise identified in the First
Amended Complaint.…” (Docket #52 ¶ 4). Rather, “[b]uyers set both the
ticket and promotional prices on Kohl’s merchandise.” (Docket #52 ¶ 5)
(emphasis added). Indeed, each of the deposed witnesses in this case have
reiterated this same fact: that pricing decisions with respect to the
defendants’ merchandise are set on a product-by-product basis by the buying
offices and are ultimately the responsibility of the individual buyer. (Docket
#50 at 8). For their part, the plaintiffs have failed to supply this Court with
any evidence tending to refute the deponents’ testimony that decisions about
pricing are made by buyers in their respective categories, instead of in
compliance with a uniform policy that is dictated by upper management such
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as Ms. Gass. (Docket #50 at 2; Docket #72). Though the plaintiffs allege that
such policies exist in their amended complaint, subjecting an upper-level
executive to a deposition—particularly one who swears under oath to have
no knowledge of the underlying facts of the price comparisons at issue in this
case—upon the basis of a mere allegation that such policies exist is
inappropriate under the circumstances. See Oppenheimer Fund, Inc. v. Sanders,
437 U.S. 340, 351–52 (1978) (“Discovery, like all matters of procedure, has
ultimate and necessary boundaries.”) (quoting Hickman v. Taylor, 329 U.S.
495, 507 (1947)).
The Court’s conclusion is further bolstered against the backdrop that
less burdensome channels of discovery have been available to the plaintiffs
to gather information on the topics at issue. With respect to marketing
statements and the defendants’ overall labeling, advertising, and marketing
practices, the plaintiffs have had the opportunity to depose two 30(b)(6)
witnesses, two senior buyers, a senior vice president, and a pricing
compliance analyst from the defendants on this very subject. (See Docket #50
at 1; Docket #76 at 9) (stating that the Rule 30(b)(6) witnesses must testify as
to “policies, practices, and procedures regarding…pricing of the Merchandise
at a Discount, including, but not limited to, the process by which You
determined that a given item of Merchandise would be priced at a specific
dollar or percentage discount from the ‘regular’ or ‘original’ item price.”).
Moreover, as the plaintiffs admit, they have served numerous requests for
the production of documents related to marketing studies, research reports,
and consultant analyses in an effort to learn about the defendants’ overall
labeling, advertising, and marketing practices. (Docket #72 at 9). In fact, these
very documents were the subject of the plaintiffs’ earlier motion to compel
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in which the Court concluded that the defendants had complied with their
obligation to turn over all responsive documents. (Docket #58 at 9)
(“[A]ssuming the defendants have a legitimate basis in fact to deny the
plaintiffs’ assertion that pricing policies are nationwide—and are instead
made on a product-specific basis—the Court will not compel the defendants
to produce any more documents than they have purportedly already
tendered to the plaintiffs.”).
With respect to the defendants’ policies regarding financial plans,
margins requirements, and markups, this Court likewise finds that the
plaintiffs had ample opportunity to (and, in fact, did) question at least half
of defendants’ witnesses on these issues. (See Docket #72 at 19-22; Docket #76
at 8, 14-15). Beyond the plaintiffs’ failure to explain these terms and outline
why they are relevant, the plaintiffs provide no justification as to why any of
the witnesses’ testimony on these points was deficient. (See Docket #72 at 18)
(asserting—without citation to any of the deponents’ testimony—that
“margin and markup requirements” are “key factors” that “buyers look to
in determining the original and regular price”). Rather, it appears that the
plaintiffs either: (1) never asked about these topics; or (2) are not satisfied
with the answers they received. Under the circumstances, the Court
concludes that neither of these reasons are a sufficient basis to hale Ms. Gass
into a deposition over a topic for which the plaintiffs have failed to
demonstrate Ms. Gass’s personal knowledge.
4.
CONCLUSION
In sum, an apex deposition is generally inappropriate when an upper
level executive lacks personal knowledge regarding the litigation, or when
the requested information can be garnered from more knowledgeable
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subordinates. See Bush v. Dictaphone Corp., 161 F.3d 363, 367 (6th Cir. 1989).
Such is the situation with respect to Ms. Gass. Her name is not mentioned
once in any discovery response or document produced by the defendants in
this case, and she has no personal involvement in the pricing of products.
What is more, the plaintiffs have had ample opportunity to discuss these
topics with lower-level employees with direct, personal involvement and
knowledge about these issues. Thus, the Court concludes Ms. Gass’s
deposition would be unduly burdensome, disruptive, and disproportionate
to the needs of the litigation, and that a protective order should, therefore,
issue preventing her deposition.
Accordingly,
IT IS ORDERED that the defendants’ motion for a protective order
(Docket #49) be and the same is hereby GRANTED.
Dated at Milwaukee, Wisconsin, this 18th day of October, 2016.
BY THE COURT:
J.P. Stadtmueller
U.S. District Judge
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